FHA Reduces Buyer’s Closing Assistance to 3% – In an effort to reduce its financial risk and strengthen its reserves, FHA has made some changes that will affect many future home buyers. Here are the key changes:
1) Mortgage Insurance Premium Increase – The upfront fee will increase to 2.25% of the loan amount.
2) Buyer’s Closing Cost Assistance Reduced from 6% to 3% – The FHA has reduced the allowable buyer’s closing paid by the seller from 6% to 3%. This will no doubt affect many home buyers who were looking to buy a home with very little money out of pocket.
3) FHA 96.5% LTV loans now require a minimum FICO score of 580. For scores under 580 you will need a 10% down payment for a 90% LTV loan. Since most lenders require a FICO scores over 600, this change shouldn’t affect many buyers.
